A Penny Saved?
Canada’s move in early April to eliminate its penny led to a few harried statements from staunch Lincoln coin supporters that the U.S. should not follow suit. For consumers, one concern is potential price inflation from the rounding of prices but a retail worry is the end of the $xx.99 or xx.$98 sticker price incentive.
Canada’s main reason for getting rid of the coin was the fact that each penny costs the Canadian government 1.6 cents to produce. The government also noted that countries like New Zealand and Australia had eliminated one-cent coins without inflation.
Canadian reports also found at least some consumers and retailers indicated they were glad not to have to bother with arguably worthless change.
Ralph Moyal, president of the Retail Merchants’ Association, said dropping the penny might speed up transactions.
“Pennies are unnecessary and no longer have any function,” Mr. Moyal told The Associated Press.
However, at least some stores were worried about the impact of pricing strategies. Wendy Butenschoen of Toronto’s Essence of Life Organics told CNN, “Something that costs $7.99 looks cheaper than something that’s $8.”
The consumer concern was inflation as stores possibly just round up prices to the higher amount.
“Our members are not opposed to the proposal as long as the proposed system of rounding is adequately explained to Canadians. That’s the sweet spot. We’ve got to make sure people understand what’s going on,” Sally Ritchie of Retail Council of Canada, told AP.
The last concern was echoed by a U.S. advocacy group, Americans for Common Cents, in a statement quickly released following Canada’s move. The group said, “This increased cost to consumers will be felt in everything from the grocery store to the gas pump.”
The group also said Congress has asked the U.S. Mint to explore ways to make the penny cheaper, and stated that each nickel costs 11 cents to make.
While regretfully admitting the Canadian penny had little use outside history buffs, Brian Grant Duff, a Vancouver collector, saw the elimination of the U.S. penny as a more sizeable hurdle. He added, “It’s got Lincoln’s head on it!”
- Eliminating the Penny – The Government of Canada Budget 2012
- Penny canned: Canada to halt production of one-cent coin – The Associated Press/The Star-Ledger
- Canada getting rid of the penny to save costs – CNN
- Canadian Penny Killed: U.S. Opponents Of 1-Cent Coin Point To Canada As ‘Trail-Blazer’ – Huffington Post
- Americans for Common Cents
- Americans For Common Cents: 66% of Americans Favor Keeping the Penny – Americans for Common Cents
Discussion Questions: In what ways, if at all, would the elimination of the U.S. penny affect retailers? Should retailers push more aggressively for its elimination?